A handful of shoppers wander the maze of empty and unfinished storefronts at Union Market Tustin – at the District Tustin Legacy

Tustin, California –

At noon on a recent Tuesday, a handful of shoppers wander the maze of empty and unfinished storefronts at Union Market Tustin – a 23,000-square-foot retail and food complex that has remained largely vacant since opening late last year at The District.

Portola Coffee Lab opened last week, joining a scant number of food shops that have launched since the holidays. The debut of the critically-acclaimed roaster comes as some tenants have criticized operations at Union Market. In recent weeks, construction of key restaurant anchors has stalled, two shops have moved out, others refuse to open, and at least one tenant has been evicted.

“I sit there six hours a day usually answering questions about when things will open,” said Ashkan Eslamdoust, whose chocolate shop is surrounded by at least three unfinished spaces.

Robert Jystad, an attorney for Union Market landlord Andrea Young, said only a few tenants haven’t met obligations to open. “It is not vacant. It is a beautiful, well designed market that is a great use of empty space of The District.”

Several shop owners tell a different story.

Since October, a dessert shop has been evicted, while three other stores – Timree, Olive Oil & Beyond and Honey & Butter – have bailed. The olive oil shop abruptly moved out Monday. The Kroft, Kettlebar and three eateries from well-regarded restaurateur Leonard Chan also are not open at the marketplace, which was designed to house roughly 20 storefronts.

“They failed to deliver. In the face of failures to address serious concerns, we chose to terminate the relationship with Union Market,” Olive Oil & Beyond owner Matthew Pour told the Register.

Artist Timree Gold, featured in an episode of “The Real Housewives of Orange County,” taught art classes and sold hand-painted artwork at her shop near the main entrance. She closed this month, saying Union Market “was just not the right fit for my company.”

KEY FOOD TENANT STALLED

At the center of the controversy is Chan, a hipster food guru, and Andrea and Russell Young.

Chan’s restaurants The Hatch, Rolling Boil and Taco Bandito have been touted as key Union Market food anchors. Chan said his lease remains “active,” yet he halted construction on all three eateries over the holidays.

Chan, who owns restaurants at South Coast Collection (SoCo) and Anaheim Packing House, declined to say why his restaurants have stalled.

The restauranteur did confirm he’s no longer a part of Union Market Mission Viejo, a similar project also managed by the Youngs. He had planned to open three restaurants there: Rolling Boil, Black Sheep Brewing and a cocktail bar dubbed Grain & Vine.

Andrea Young said Chan has failed “to meet his obligations in both of our projects.”

Young, who assembled a similar mix of food and retail shops at The OC Mix (formerly The OC Mart Mix) and Market LV in Las Vegas, would not comment any further. She referred questions to her lawyer, Jystad.

In an interview last week, Jystad declined to address specific tenant issues, including the fate of Chan’s restaurants.

Jystad said Andrea Young has had “potential disputes with a small number of tenants.” When you have several tenants to deal with, “you are going to have a few problems,” he said.

“The Youngs are under pressure from the master landlord (Vestar) to make sure Union Market is operating fully,” he added.

The Youngs lease the space from Vestar, the owner of The District, and in turn, rent spaces to other businesses. Vestar representatives, including spokeswoman Kimberly Daskas, have not responded to multiple requests for comments.

EARLY PROMISES

In September 2013, Vestar announced a deal to bring Union Market to the shuttered Borders Books & Music space.

Vestar called the marketplace concept “the brainchild” of the Youngs. The couple’s OC Mix and Las Vegas projects would serve as models for Union Market Tustin, which would become an “artisanal marketplace of independent gourmet food, fashion and lifestyle” shops.

Three months later, Kaleidoscope tapped the Youngs to bring Union Market to Mission Viejo. Vestar and Westport Capital Partners, owner of Kaleidoscope, both said their markets would open in 2014.

Hong’s craft goods blog has earned her a worldwide following. When Andrea Young was courting her, Hong said Young told her to “take a look” at what she had done at the OC Mix.

Convinced it was a great opportunity, Hong signed on to join Union Market Tustin in early 2014. She began collecting thousands of dollars of inventory to fill her shop.

Around the same time, Ivy and Justin Carnegie cut a deal with the Youngs to bring their Fullerton juice bar to the marketplace.

“She really pushed the OC Mix on us. ‘Go over there and see what I did,’” Ivy Carnegie said of Young.

Last year, the Carnegies closed their 2-year-old Drinkbar Juicery in Fullerton with the expectation that Union Market would open within a month or so. The shop, which specializes in cold-pressed juices geared for men, has been one of a few food stores open in recent months.

“There’s a lot of empty spaces, and it frustrating,” Ivy Carnegie said.

TENANTS: SUITS SHED LIGHT

Since last February, promises of grand openings have come and gone.

Last summer, a number of tenants were sent two lawsuits filed in 2013 against the Youngs. Each case was tied to retail projects the Youngs had managed at SoCo and Las Vegas.

“There started to be all these red flags” said Katie Torres, owner of Le Pop Shop.

The Register has obtained copies of the lawsuits. Filed a day apart in April 2013, each suit accuses the Youngs of breach of contract.

In the 2013 SoCo lawsuit, property owners Scott Burnham and Bryon Ward said the Youngs, as 50 percent partners at the OC Mart Mix, owed them close to $800,000 – funds tied mostly to capital costs and delinquent rent. The suit also accused the Youngs of mismanaging the Mix – from soliciting tenants for the Youngs’ copycat project in Las Vegas, to denying the SoCo owners password access to the Mix’s website.

The SoCo case has been settled. Andrea Young has not responded to multiple requests to address the suits. Jystad also declined to comment, stating he did not represent the Youngs on either of the lawsuits.

The owners of SoCo said they are “restricted from saying anything” about the lawsuit. They also declined to say if they had recouped the delinquent money the Youngs allegedly owed them.

“As a matter of clarity, we can tell you that the Youngs have had absolutely zero ownership interest or involvement whatsoever in the OC Mix for some time, nor have they had any involvement in any way for quite some time in any management, dealings or tenant activities at the OC Mix,” SoCo said in a prepared statement.

In the Las Vegas case, the Youngs are accused of reneging on a partnership with Sherrie Jordan and Dawn Mednick, owners of the Cellar wine and cheese shop in San Clemente and The Cheese Shop at the Mix. The suit states Jordan and Mednick spent hundreds of hours and “thousands of dollars” to open at Market LV, a food and retail marketplace at Tivoli Village in Las Vegas.

The suit states the Youngs brought in another investor, stole the Cellar’s business model and opened a wine and cheese bar without them.

Gus Flangas, the Nevada attorney representing the Cellar, said his clients “hooked up” with the Youngs and without warning, the couple “booted them out.”

The case has not been settled, Flangas said.

The Youngs are no longer overseeing Market LV. In September 2013, Tivoli Village informed Market LV tenants they have hired a new property manager, according to a document obtained by the Register.

Carolyn Martin, a spokeswoman for Tivoli Village, declined this week to comment about the Youngs’ past involvement with the project.

HELPING SMALL BUSINESS?

In media reports about Union Market, Andrea and Russell Young have boasted that developers have sought them out to fix their aging malls and retail centers using their work at the Mix and Las Vegas as a model.

The Newport Beach couple have said they planned to build Union Market as a national brand.

“We bring a heartbeat to a big center,” Russell Young told the Register last summer.

During a previous interview with the Register, Andrea Young said she is an advocate for creative startups.

She said projects like Union Market allow business owners to launch their dream stores with very little upfront costs. Small storefront spaces at Union Market can range from $4 to $8 per square foot, she said.

That was true for Torres of Le Pop Shop. She believed Union Market was the perfect way to launch her macaron confection shop.

She said rent on her less than 200-square-foot space was going to be $675 for the first six months, and $900 thereafter.

She never opened the store. Since last summer, Torres has been one of the more vocal Union Market tenants. She had demanded regular updates from the Youngs and had rallied other tenants to do the same.

Jystad sent her an eviction notice Oct. 23. The notice, obtained by the Register, said her behavior at the market was “disruptive to the smooth and reasonable operation of other businesses on the premises.”

“I asked the questions everyone wanted answered but were to afraid to ask,” she said.

Torres, who had invested $60,000, packed up and left (with her 5- and 7-year-old children watching) on Nov. 6.

“Last year, was a very expensive lesson.”

GRAND OPENINGS CAME, WENT

With restaurants the main draw for foot traffic, some shop owners have been reluctant to open their stores, including Oh, Hello Friend, Front Porch Pops, and Torch S’mores. Drinkbar and Chocolat Noir have kept limited hours.

On Feb. 10, Oh, Hello Friend was ordered to open and pay rent.

“Your Unit is prominently placed in the Union Market and your failure to open your business is a cause for concern that has been noticed both by the master landlord and by other tenants,” the letter stated.

Hong, who has invested $25,000 for her Union Market space, has refused. As of Thursday, she has not opened.

“I won’t budge,” Hong said. “She said we would all open together. I won’t give in to her bullying and demands.”

NEUTRAL PARTIES REACT

Not everyone is unhappy.

Jody McFadin, who owns the clothing shop Luella, told the Register last week she was satisfied with her sales. In an email, Stephie Tchamanian of Lili Claspe Jewelry said late Thursday that she’s open 7 days a week and enjoys being a tenant at Union Market. Beyond that, both shop owners declined comment any further.

Other outlets open include Spice & Tulips, Central Bar, Shangri-La and Woodsnap. Attempts to reach those owners for comments have been unsuccessful.
Jeff Duggan at Portola Coffee Lab, who has worked with the Youngs since 2011, said he hasn’t had any issues with the couple.

Hugh Pham, co-founder of The Kroft, said he and his business partners are minding their own business. His poutine and comfort food bar has seen wild success at the Anaheim Packing House.

He expects his Union Market Tustin location to open in a few weeks. Portola and The Kroft are also slated to open at Union Market Mission Viejo.

Though the rollout has been slow, Pham and Duggan say they are not worried about the long-term viability of Union Market. In fact, Duggan compared the staggered openings to his experience at The OC Mix.

“I think it’s going to be fine,” Duggan said. “All of this is playing out similarly to how The Mix played out in the beginning. The Mix had a slow start. Not everyone came on right at the same time.”

Portola was one of the first food and beverage shops to open at the Mix in 2011. The retail and food hub contains a mix of independent clothing boutiques, artisan retailers, niche food shops and upscale restaurants. It is home to critically-acclaimed Taco Maria and Chan’s Shuck Oyster Bar.

Duggan said: “It wasn’t until a couple of years later that it fell into place.”

But some Union Market shop owners say they can’t wait that long. Ivy Carnegie, 27, and her husband, Justin, have $50,000 at stake.

“It’s really slow. On Monday, we had one sale,” she said. “If we didn’t have our entire savings put into this place, we would be looking for another place.”

Duggan is sympathetic.

“The food draw is very important and the sooner we can get Kroft and Kettlebar open, the center will look finished,” he said.